How UCOOK started in a garage and grew to a R100m business

by Nadine Todd

David Torr went from a trust fund kid who kept getting kicked out of school, to flat broke and waitering, to launching a R100 million turnover business from a garage. It wasn’t the only venture he started. After travelling the world and eventually being cut off from his trust because he wasn’t living up to his father’s posthumous stipulations, David returned to South Africa, lived in his girlfriend’s parents’ house and waited tables to be able to contribute something to his living expenses. But he knew he had potential he wasn’t living up to and that it was time to make some real changes.

“An old school friend walked into the restaurant I was working at. We were catching up and he asked what I was up to, assuming I was studying something and waiting tables on the side. Except I wasn’t — that was all I was doing,” says David.

“It was a real low point for me. I’d always assumed I had hidden potential, but I was scared to dedicate myself to anything in case it was just a line I fed myself. Realising that everyone I knew was getting on with their lives, becoming CAs and lawyers, was a reality check.

“There’s something interesting that happens when you hit such a low point. Adversity breeds strength. If you feel terrible and your relevance within an environment is non-existent, there’s a lot of internal sculpting and cerebral reprogramming that you can do in a space like that. When you’re really at the bottom, you can make some key decisions about what you want and don’t want, and what you’re willing to do to get there.”

David evaluated what he had going for him. In between his travels he had completed a two-year copywriting diploma, but since he was dyslexic, it was a useless qualification, other than the fact that it had added an element of creative design thinking to his skill set.

“I’d always believed that I could take a high-level scope in concepts, single out individual problems and break them up into granular pieces and optimise them. I thought I had a process-driven, analytical mind. The problem was that I had no proof — it was all just theory. It’s easy to think about what you could do when you’re traveling through Thailand. I’d reached a point where I needed to stop thinking about my potential and get out there and do something. One way or the other, I was going to find out if I had the potential I thought I had.”

David made two key decisions. First, he wouldn’t only start one thing. He needed a few horses in the race and he settled on three ideas. Second, he wasn’t going to do them alone — he was going to assemble a team. “I did that for two reasons. First, I think I was fundamentally lacking confidence. I wanted a tribe. Second, I didn’t really have any skills or qualifications. But I am very good at finding the right people, with the skills, mindset and networks to make great things happen, and then sharing my passion to get everyone excited about an idea.”

Finding entrepreneurial feet

So, that’s what David set out to do. He approached two friends, one a big local DJ and the other ran a bar service business, Carbon Events, and pitched a festival idea, Eden Experience. They were in. With no start-up funds to speak of, they sold tickets before they booked the venue, which gave them enough for a deposit to get started. Eden launched in 2014 and hosts three festivals a year. Importantly, at the end of 2015, the business earned David R120 000, which he invested in UCOOK.

The second business is a property development company, Solace. Also launched in 2014, today, Solace has a holding portfolio of R25 million in the student accommodation space and has invested in its first residential development, a R100 million project, Urban Artisan in Woodstock. Pre-sales were at 87% at time of print. The team has also raised a small opportunistic fund to repeat on the deal.

“I had a theory that student accommodation in Cape Town is related to proximity to UCT rather than area. I approached a friend, Nick Toms who was in property and whose dad had the funds to potentially back us and pitched my idea. He liked it — he also thought that if we could prove a use case example, we’d have his dad’s backing.”

David found a house that they could refurbish and Nick found a better one. They were able to purchase it for a good price because the house’s current rental yield was poor. “We focused on security and utilities, fibre access, electric fences, access authorisation at the gate, created a great internal environment and took rental revenues from R3 000 per month to R5 500. The house was 500 metres out of the ‘zone’.”

David and Nick had their use case, and Solace started to grow. “It’s all about matching the right partners to the right ideas. Nick is now a serious property developer, but this got him excited again.”

The genesis of UCOOK

UCOOK was David’s first idea though, as well as the most complicated. “I played around with the idea for six months in Thailand. I already knew my trust was cut and that things would be different when I got back to South Africa.

“My girlfriend and I were teaching in Thailand, but I’d been introduced to HelloFresh in the UK a few months earlier. I thought meal kits was a really interesting concept. I’ve always been a foodie, and I thought this was a clever way to combat issues associated with cooking: What to cook, how to make it, wastage — all those things.

“What I didn’t like were the categories — I didn’t like one of the four dishes I received — and I thought there was a problem in the brand’s positioning. There was no transparency around the supply chain. If you’re going to sell farm to fork, you need to show exactly where the produce is coming from.”

More than this though, David was convinced there was room for a brand like this in South Africa. “At that time, South Africa was in a technical recession, and yet Woolworths was doing well. People were spending money on premium food. In the eCommerce environment, Yuppiechef was a really relevant brand as well. I thought if you joined the two, those compounding factors made an interesting business case.”

By the time David returned to South Africa in early 2014, he had formulated a few key details. “Most people start a business with a skill set and then leverage it. Very few people say, ‘I have absolutely no skill set, so I need to reverse engineer this process. I need to start with the user, build out a series of profiles and fundamentally understand what key benefits I would need to offer to allow me to access that user in such a way that I’m creating a bespoke, tailored solution that hits the nail right on the head.’”

It sounds simple, elegant and smart. And 18 months later it was all of those things. But the actual start-up of UCOOK was in a garage, packing food kits next to a Chrysler in the co-founder’s parents’ house.

“I met Chris Verster-Cohen in Thailand, and over wine one evening told him all about my idea. He thought I really knew what I was doing, and when I approached him months later back in Cape Town, he was in. He had just completed his BSocSci at UCT and had started a degree in architecture, but he was excited about the prospect of taking a risk on a start-up we both believed could be something big.”

Start-up successes and failures

As it turned out, UCOOK was a terribly difficult business to bootstrap. “I was a big dreamer and fairly good at high-level thinking. Chris brought creative and strategic thinking, a routine work ethic, which I didn’t have at that stage, and passion to grow the brand, but neither of us really knew anything else about what we were doing.”

Chris and David spent six weeks sharing notes until they knew what they wanted to launch. They asked Chris’ parents if they could take a corner of the garage and they each borrowed R25 000, Chris from his parents and David from his stepdad. The first R25 000 bought a vacuum sealer, a hand-held sealer, laminate flooring to keep the environment clean, and a few boards, knives and scales. The rest of the money was earmarked for a website, but they launched on Facebook first.

“We set up our production space, built a Facebook page and started talking about what we were doing. Orders were taken on a Monday for delivery on the following Monday, and because everything was paid up-front, we didn’t need additional capital to fill the orders.”

UCOOK’s first 21 orders came from friends and family. The partners managed a turnaround time of one day, and were extremely impressed with how they’d packaged the meal kits. They delivered each kit personally and patted themselves on the back. And then the Facebook queries started coming in — the ingredients looked delicious, but could they recommend a good website for lasagne recipes?

“We’d forgotten to include recipe cards,” says David. “Our orders went from 21 to zero. The only two people who continued to order from us were Chris’ parents. I’m ready, fire, aim. I always have been, and it has its pros and cons, but we realised we needed a plan.”

That’s when UCOOK’s third partner, Katherine Barry, joined the team. “Katey is our backbone. She has her masters in maths, but she didn’t want to be an analyst. She thought what we were doing sounded fun. She’s the COO, CFO… everything. She’s the reason we’ve been able to scale from a garage to R100 million in annual revenues in three and half years.”

David found a friend willing to build them a WooCommerce site for R25 000 and the team started seriously planning what their business needed to get off the ground. “We weren’t first to market in South Africa — there was already an established competitor in the space — but we believed we could differentiate ourselves. We just needed to get our processes right.”

The team waited tables to pay the bills and worked on the business when they could. By the end of 2014, they were sending out 50 boxes weekly, totalling R100 000 a month.

“We knew that UCOOK couldn’t scale off traditional channels that eCommerce sites use like Adwords. These are heavily reliant on the volume of search that already exists, and no one is searching for dinner kits or particular recipes. We realised that the only way we would be able to grow was through email marketing. So, we had to develop a reputation for ourselves, which was hard considering that we had absolutely no orders, and then we had to try and partner with relevant eCommerce houses and run competitions. We’d partner with vineyards, other eCommerce sites and offer free dinner kits, and our emails got sent to their data base.”

Before their official ‘launch’ towards the end of 2014, David had also seeded a lot of PR into environments aligned with what they were doing, and it worked — UCOOK got great press.

“We concentrated on what it would take to scale our operations and grow the eBusiness. We were always thinking about our process and refining it. We built a business case, with detailed sections on marketing, operations and growth dynamics. We were spending R200 a week on Facebook marketing, and steadily building up a database. All dinner kits were pre-paid, which allowed us to bootstrap, but we reached a point where we needed more funds.”

Finding a funder… eventually

David was able to invest R120 000 which he had earned from Eden, and the team secured some angel investment — and then a VC firm, that had read about UCOOK in the Argus, approached them.

“We were excited. We thought we really knew what we were doing now and if we could secure some VC funding we’d really be able to take the business to the next level — and at the very least move out of the garage.”

David and Chris did a 30-minute presentation that didn’t cover financials, but did unpack UCOOK’s differentiators in the market, their competitive advantage and some of the systematic processes for operations and how the team believed they could deliver on an a la carte selection at scale, instead of category levels. They also covered why they packaged by bag instead of box. It was enough to secure a second meeting — which didn’t go quite as planned.

“We wanted to raise R1,5 million. In hindsight, it’s obvious that they thought we were bigger than we were. Our monthly turnover was R100 000. They were expecting five times that. When they realised we were operating in a completely different financial ballpark, they told us to come back when we were more ready.”

The meeting hadn’t been a complete waste of time though. “Somehow, through the grapevine, Silvertree heard about us. They were just starting their fund, and they were looking for young, interesting entrepreneurial businesses to invest in. They wanted to play in this space; our current size was a benefit. They were also all ex-Rocket guys, the funders behind HelloFresh, so they knew the model well, and had been involved in some of South Africa’s key eCommerce start-ups.”

This time, the funders weren’t sceptical about the numbers, but about the team. “It didn’t really make a lot of sense to them. No one had studied what we were doing, our skill sets didn’t really seem to match the business and everything was a little bit in shambles. They particularly couldn’t believe we were all waitering. We saw it as an advantage — we weren’t drawing salaries. They said you can’t build a serious business while you’re doing double shifts waiting tables. They did recognise some integrity in our knowledge base and the grit it had taken to get that far though, and so we offered to prove ourselves. A shareholder’s dinner for 50 people was coming up, and we offered to cater it at cost. We wanted to prove our capacity to execute on things. They agreed.”

At the end of the evening, David was sharing a bottle of red wine with Silvertree’s MD, and during an impassioned speech about what UCOOK was going to achieve in the market, he spilt red wine on the MD’s shirt.

“The next day they called us and said they would do the deal. They realised we were a live or die team — we were going to make this work one way or another; we’d rather run ourselves to death than fail.”

David believes there was a second factor playing in their favour as well. “We had done a lot of research. We were passion backed up by data, with a good deal of perseverance added in for good measure. We also all had skin in the game.”

In mid-2015, Silvertree secured 50% equity in a business with an annual turnover of R1,2 million. Three and a half years later, turnover is R97 million. The injection of funds allowed UCOOK to move into larger premises and start purchasing more equipment — in particular industrial fridges. “The capex requirements were beyond our working capital abilities,” says David. “We needed a funder, and once we had one, the business started experiencing 400% year-on-year growth for two and a half years, with 150% growth over the last year.”

Focused on the future

“Our growth is the result of a few different things. First, the capex investment was critical, but we’ve also leveraged our negative operating cycle well. We have great payables with our suppliers. We’re fair when it comes to costing things out and have grown with our community suppliers, but we also pay in 40 to 60 days, while our customers pay us upfront.

“We’ve fine-tuned a lot of growth nuances: We’ve received a lot of relevant media exposure, we’ve built our database to 500 000 people, thanks to key partnerships, and we’ve engaged users in a novel way. We create excitement. Because each recipe is created by a well-known chef, our customers become chefs themselves, sharing what they make online. It’s one of our core value propositions — learning to cook five-star meals from a chef.”

UCOOK currently accounts for 10% of South Africa’s online grocery market, which means the next avenue for growth will need to come from different channels. “Within the LSM we’re operating in, we’re peaking out with dinner kits. I don’t believe we will do 100% + growth again. I think we’re looking at 50% growth at best, and that will be achieved through above-the-line media, accessing people who aren’t frequently in the online environment.”

As a result, David and his team are expanding on their current channels. “We need to focus on what else we can service; on what other interesting solutions we can offer. We’re looking at cleanse lines that include gut health and kombucha, breakfasts and other solutions that align with our brand values: Offering a complete, curated solution that has a transparent value chain, is sourced locally and organically and lives within our brand pillars. We will always be focused and tailored — we want to understand the issue and solve it.”

The bigger play is retail: Frozen meals that align with UCOOK’s brand promise and dinner kits that can be bought from a store. In line with this strategy, UCOOK has signed a second investment deal, matched by Silvertree, with Smollen, which has a strong retail focus. “Based on our last round of funding, the business’s valuation is currently R200 million. There is so much scope for us; we’re excited for what the future holds.”

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